“Taxmageddon” Looms in 2013

Thursday, May 17, 2012
By: Noah Silverman, RJC Congressional Affairs Director

Many vital decisions hinge on the results of this year’s elections, but few will affect American voters as directly as the future of tax policy. As you probably know, back in 2010, Republicans – who had just seized control of the House - succeeded in compelling President Obama to extend the 2001 and 2003 tax relief provisions in full.

Unfortunately, that reprieve only lasts through the end of this year. So unless the President and congressional leaders in both parties can come to terms on a consensus plan, staggering tax hikes will be imposed on nearly every American household at year’s end. Because of the high stakes, Washington, DC is abuzz with concern about what some are calling “Taxmageddon.”

Assuming no action is taken, economists estimate that Taxmageddon would cause government revenue to surge by $494 billion in just one year. That’s an average of $3,800 per person in 2013.

And don’t assume it will only be the well-off facing a drastically expanded tax burden. Despite the “tax cuts for the rich” demagoguery of the Democrats, 60 percent of the benefits from the 2001 and 2003 tax relief packages go to middle and low-income taxpayers.

Of particular concern for younger families would be the expiration of the child tax credit, which would be halved from $1000 to $500, and the restoration of the marriage penalty.

Investors should brace for huge increases in taxes on dividends and capital gains. And 34 million taxpayers who have been insulated from the Alternative Minimum tax would be made subject to its punitive impact.

Since 2013 will also usher in new taxes under Obamacare and other austerity measures instituted pursuant to last year’s deal to raise the debt ceiling – and our nation is likely to bump up against our borrowing limit again around the same time – you can see why economic forecasters are looking ahead to the coming year with great dread.

Incredibly, President Obama and Democrats in Congress have shown relatively little interest in acting to prevent Taxmageddon.

In fact, it’s quite likely that they view these circumstances as an opportunity to engineer a huge tax hike they can blame on the GOP.

Obama is somewhat constrained politically by the promise he made repeatedly in 2008 not to raise taxes on families earning less than $250,000 a year. But there are clear indications he will jettison that pledge if he is reelected.

In The Escape Artists, his recent account of the Obama administration’s early economic decision-making, Noam Scheiber explains that the President’s first budget director, Peter Orszag, “believed the only practical way to balance the budget was to repeal all the Bush tax cuts, not just the upper-income variety.”

He continues:

... the administration’s chief wonk – Barack Obama – was intrigued. He asked a series of encouraging questions about how the proposal would work. According to two sources in the room, he was taken with both the political merits – that is, putting Republicans on the defensive – and the policy rationale of lopping trillions off the deficit. He gave no indication that he was troubled by the plan’s most explosive feature: that it would likely break a central campaign promise – not raising taxes on the middle class – one Republicans would surely wrap around his neck with populist glee...

What is clear is that, having been tempted to end all of the Bush tax cuts in 2009, the president would only find the idea more attractive were he to win a second term. At that point, he will never again stand before the voters as a presidential candidate. There would be nothing to stop him from flouting a campaign promise, even one as sensitive as his tax pledge.

Since even a defeated President Obama will remain in office until after the expiration of these tax relief provisions, turbulence may be inevitable, but stopping tax code changes that would imperil jobs and the economy will be easier if the President is a lame duck.

This year, the GOP must educate voters who may not be aware of the looming Taxmageddon disaster so that we can elect a President who is not secretly enamored with the idea of massive across-the-board tax increases.

This article as published in the March-April issue of the RJC Bulletin, a bimonthly newsletter sent out to current paid RJC members and leaders. To receive upcoming issues of the RJC Bulletin, please join the RJC or renew your membership by calling 202-638-6688.
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RJC Strongly Rebukes Belgium Ambassador's Reported Remarks Linking Israel, Anti-Semitism

Washington, D.C. (December 3, 2011) -- Republican Jewish Coalition Executive Director Matthew Brooks released the following statement in reaction to the reported statement by U.S. Ambassador to Belgium Howard Gutman, that a “distinction should be made between traditional anti-Semitism, which should be condemned and Muslim hatred for Jews, which stems from the ongoing conflict between Israel and the Palestinians.”

"The remarks reportedly made by President Obama's Ambassador to Belgium are outrageous," Brooks said. "It's no wonder that hearing such a message from this country's representative left an audience of European Jewish leaders 'stunned.'"

Brooks continued, "Unfortunately, this administration's policies of 'daylight' and pressure toward our ally Israel encourage the dangerously misguided tendency to make excuses for anti-Semitic hatred and bigotry.

"The linkage in the ambassador's remarks, blaming Israel for anti-Semitism, is a short step from the linkage that President Obama has expressed several times himself, that Israel is to blame for the unrest and instability in the Middle East. Both forms of linkage are fundamentally wrong.

"Given the importance of the US maintaining its leadership role in the fight against resurgent European anti-Semitism - including in Belgium - it is good that the administration has distanced itself from Ambassador Gutman's remarks. Now, it is essential that the administration address the question of how Gutman can credibly represent our nation in his important post."

The Israeli newspaper Yedioth Ahronoth reported Friday that Ambassador Gutman told his audience that "a distinction should be made between traditional anti-Semitism, which should be condemned and Muslim hatred for Jews, which stems from the ongoing conflict between Israel and the Palestinians" and went on to advocate diplomatic concessions by Israel to Arab adversaries as a way to reduce the prevalence of anti-Semitism among Muslims.

According to the same report, “The legal experts at the event were visibly stunned by Gutman’s words, and the next speaker offered a scathing rebuttal to the envoy’s remarks.”

Yedioth Ahronoth went on to report:

Gutman also presented participants with a short video clip showing him received with warm applause at a Muslim school in Brussels. While he did not mention what prompted the warm reception, his message was that this is the kind of welcome given to a Jew who supports President Obama’s policy of openness to Islam... the US envoy was asked whether Obama’s policy did not cause America to lose its influence in the region. Gutman responded by saying that the Arab world appreciates Obama following his speech in Cairo, referring to an address delivered by the president in 2009.

The Weekly Standard today reported that "Gutman was a major fundraiser for President Obama’s 2008 election campaign. He bundled $500,000 for Obama, according to, personally giving at least $2,300 to the campaign."

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